Business Economics Assessment Task

Running head: BUSINESS ECONOMICS
BUSINESS ECONOMICS
Name of student:
Name of University:
Author’s Note:

BUSINESS ECONOMICS1
Table of Contents
Answer to Question: 1.....................................................................................................................2
Answer to Question: 2.....................................................................................................................4
Bibliography....................................................................................................................................6

BUSINESS ECONOMICS2
Answer to Question: 1
Oligopoly market
An oligopoly market is a market structure which comprise of small number of large firms
who dominate the market for an infinite number of buyers. The market power remains highly
concentrated due to the availability of few large firms who provide either similar or
differentiated products. The products either have a qualitative difference or by brand value and
advertising. These small number of firms depend upon each other to dominate the market and
prohibit small firms from entering into the market.
Characteristics of oligopoly market:
 Strategy of interdependence- When there are few firms in the market, the decision taken
by one firm has an effect on the performance of other firms with respect to revenue and
market domination. As a result, these firms operate by taking into account the
performance of other firms and whether to compete with rival firms.
 Barriers to entry- The firms in this market are comparatively bigger and does not allow
small firms to enter into the industry and dominate the market
Application of game theory in firm’s strategy
Firms in oligopoly market follow the model of game theory where each firms choses the
strategy that gives them the maximum profit. Firms in Oligopoly market observe the actions
taken by other forms and implement strategic planning which enables to estimate the responses
other firms.
Cartel theory of oligopolistic firms